Question

Corleone Inc. is considering adding some automatic equipment to its production facilities. An investment of $200,000 will produce an initial annual benefit of $45,000, but the benefits are expected to decline by $2,500 per year, making second-year benefits $42,500, third-year benefits $40,000, and so forth. The firm uses straight-line depreciation, an 8-year useful life and no salvage value at the end of the 8 years. Corleone Inc.'s tax rate is 42%. Create and submit a table that contains the following columns: End-of-Year, Before-Tax-Cash-Flow, Straight Line Depreciation, Taxable income, Income Taxes, and After-Tax-Cash-Flow Grading Criteria: BTCF: 1.00 point SL Depreciation: 0.50 points Taxable income: 1.00 point Income Taxes: 0.50 points ATCF: 1.00 point HTML Editor B IVA - A - IEE 3 x Vx TT 12pt - Paragraph words

Answer 1

Solution :-

Depreciation Every Year = $200,000 / 8 = $25,000

M9 B с D E F. G Depreciation Taxable Income Income Taxes 1 А. 1 Solution 2 3 Year 4 0 5 6 2 7 3 8 4 5 10 6 11 12 8 13 14 15 16 17 BTCF ($200,000.00) $45,000.00 $42,500.00 $40,000.00 $37,500.00 $35,000.00 $32,500.00 $30,000.00 $27,500.00 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $20,000.00 $17,500.00 $15,000.00 $12,500.00 $10,000.00 $7,500.00 $5,000.00 $2,500.00 $8,400.00 $7,350.00 $6,300.00 $5,250.00 $4,200.00 $3,150.00 $2,100.00 $1,050.00 After tax Cash flows ($200,000.00) $36,600.00 $35,150.00 $33,700.00 $32,250.00 $30,800.00 $29,350.00 $27,900.00 $26,450.00 9 7 >

B C D E F Depreciation Taxable income Income Taxes A26 А 1 Solution 2 3 Year 4 10 5 1 62 7 3 8 4 95 106 117 128 13 14 15 16 17 BTCF -200000 45000 =B5-2500 =B6-2500 =B7-2500 =B8-2500 =B9-2500 =B10-2500 =B11-2500 25000 25000 25000 25000 25000 25000 25000 25000 =B5-C5 =B6-C6 =B7-C7 =B8-C8 =B9-C9 =B10-C10 =B11-C11 =B12-C12 =D5*0.42 =D6*0.42 =D7*0.42 =D8*0.42 =D9*0.42 =D10*0.42 =D11*0.42 =D12*0.42 After tax Cash flows =B4 =D5-E5+C5 =D6-E6+C6 =D7-E7+C7 =D8-E8+C8 =D9-E9+C9 =D10-E 10+C10 =D11-E11+C11 =D12-E12+C12
If there is any doubt please ask in comments

Thank you please rate